LPAB WS 2

1. LPAB WS 2 Remedies

2. Overview of Remedies

3. Loss • Must be actual loss • Quantifiable financially • Plaintiff’s loss, not defendant’s gain • Possibility of change to need for actual loss – Alfred McAlpine Constructions ?

4. Causation • Loss must be caused by defendant’s breach • ‘But for’ test

5. Remoteness Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things, from such breach of contract itself, OR such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. - Hadley v Baxendale

6. The First and Second Limbs • Ordinary (general) loss/damage • Must be reasonably foreseeable at formation as naturally arising from breach 2. Extraordinary (special) loss.damage • Must be brought to attention of defendant at time of formation • Actual knowledge of part of defendant required

8. Can the plaintiff get substantial damages?

9. Lord Dunedin in Dunlop Pneumatic Tyres v New Garage • will be held to be penalty if sum stipulated is extravagant and unconscionable when compared to the greatest possible loss from the breach 2. will be held to be a penalty if the breach is failure to pay a sum of money, and the sum stipulated is greater than the sum owed

10. Lord Dunedin (cont) 3. presumption that it is a penalty if no difference in amount payable on different types of breach (more serious and less serious breaches treated the same) 4. just because a precise pre-estimate of the likely damage is nearly impossible, doesn’t mean the stipulated sum isn’t a genuine attempt to do so (ie not a penalty) – in fact, it’s more likely to mean that it IS a liquidated damages clause

11. The Streamlined Version 1. Description of clause by parties? - indicative, but not conclusive 2. Magnitude of sum payable? - extravagant/unconscionable? 3. Nature of obligation breached? 4. Circumstances in which sum is payable? - overlap between (3) and (4): is there a difference in the sum payable for different type of term/different type of breach? 5. Difficulty in estimating loss?

12. AMEV-UDC Finance v Austin 1. the degree of disproportion between the stipulated sum and the loss likely to be suffered by the plaintiff: this will go to the oppressiveness of the term; and 2. the nature of the relationship between the contracting parties; this goes to the unconscionability of the plaintiff’s conduct in seeking to enforce the term. Per Mason and Wilson JJ

13. Limits on Specific Performance • ‘clean hands’ necessary • must not cause intolerable hardship to the defendant • must be mutual: if the tables were turned, would the other party be entitled to specific performance? • can’t be necessary for the court to exercise constant supervision to make sure the order is complied with • won’t be awarded for personal service – the court won’t make parties in conflict work together.

14. Total Failure of Consideration ‘There is failure of consideration if a promisor does not receive the performance (agreed return) which was promised as the price of (in return for) a money payment made by the promisor.’ Carter, Peden and Tolhurst, Cases and Materials on Contract Law in Australia at 789.